JKX revenue rises 10%, EBITDA 18% in 2019

JKX Oil & Gas (JKX LN) reported a 9.6% yoy revenue
increase to USD 101.7 mln in 2019, according to its Mar. 31 filing. Its revenue
in Ukraine improved 12.6% yoy to USD 84.3 mln, which was the result of boosted
hydrocarbon output (by 52% yoy). Its Russian revenue decreased 2.2% on the
background of flat yoy natural gas output. The company’s EBITDA swelled 18.0%
yoy to USD 42.4 mln, according to Concorde Capital estimates, as Ukraine’s and
Russia’s EBITDA both grew 20% yoy (to USD 42.2 mln and USD 7.0 mln,
respectively) and operating losses in the U.K. increased 10% yoy. The company’s
net income from continuing operations surged 72% yoy to USD 20.2 mln, while
total income advanced 46% yoy to USD 22.2 mln.

The company generated USD 33.0 mln in cash flow from
operations (up 5.4% yoy) and boosted capital expenditures 2.5x yoy to USD 28.8
mln in 2019. Its cash balance increased 6.5% yoy to USD 20.7 mln as of
end-2019. JKX also reported that it paid its last bond tranche in February (USD
5.8 mln), thus becoming debt-free. Besides cash, the company has open credit
lines for USD 13.9 mln, which it is not using currently.

The company sold its Hungarian assets (which it
reported as discontinued operations in 2019 accounts) and completed its
workover programs in Russia, having decided to concentrate on investments into
Ukrainain assets in 2020.

Alexander Paraschiy: JKX seems to be well prepared for the challenging situation on energy
commodity market, having a solid liquidity position and no large CapEx plans.
This, as well as the company’s recent victories against Ukrainian tax administrations, allows us to remain optimistic about JKX’s
potential to increase value in the mid-term.